What College Graduates Need to Know about Insurance

Congratulations! You’ve beat some heavy odds by graduating from college. Only half of college freshmen graduate within six years. But those who do can count on tremendously better lifestyles. A Bachelor’s degree increases your lifetime earnings by $2.1 million — and a Master’s degree, $2.5 million – compared to a high school diploma alone. [1]

When the time comes to pack up your things and leave your parents’ home, you’ll find some new categories of expense facing you. Not only will you need to handle your own living expenses, you’ll need to consider what kinds of insurance coverage you need to protect you against loss.

For new college graduates heading out on their own, there are three types of insurance that will help you sleep better at night.

1.       Car insurance

2.       Renter’s Insurance

3.       Health Insurance

Car Insurance

Car insurance not only lets you sleep at night. It keeps you out of trouble with the law. Every state in the U.S. requires you to carry liability insurance. It pays for damages to another person’s vehicle and medical expenses for the injured parties.

Some states use a legal system known as tort. It refers to a wrongful act that requires compensation. If you crash into another vehicle in a state that follows the principle of tort, you’ll be held responsible for the damages. Liability insurance pays for those damages … up to a limit. Our friends at Wikipedia show you the minimum liability coverage [2] you need to meet each state’s laws. The minimums are generally stated as a series of number such as 10/20/10. This example means the liability coverage you have pays up to $10,000 for each person injured, but capped at a total of $20,000 per accident no matter how may were injured. The last “10” refers to $10,000 for property damage (the other person’s vehicle).

But these state-mandated minimums are not nearly enough to cover the real-world cost of medical care. Just $10,000 or even $20,000 is not likely to cover the cost for medical treatment, perhaps including rehabilitative therapy and other expensive care, in a serious accident. Moreover, $10,000 would be spent quickly in a major accident to repair the other drive’s vehicle – or even pay the replacement cost for a car that’s been totaled.

For those reasons insurance professionals strongly urge that you carry enough liability insurance to handle real-world situations. Policies from major insurance carriers routinely offer policies such as 100/300/50 and even greater.

Other coverages are not required by law, but they protect you against what could be very substantial financial losses.

·         Collision insurance pays for damage to your vehicle.

·         Comprehensive coverage pays for miscellaneous damage not incurred in an accident, as well as theft of your car.

·         Uninsured and Under-insured motorist insurance, usually called “UIM” or “UM”, pays for medical costs for you and your passengers when you’re in a crash with someone who’s under-insured or not insured at all.

Other coverages are also available, so be sure to talk with an insurance professional to understand what’s best for you. For example, if you finance a car with a bank or credit union you may want to consider GAP coverage. It pays off the “gap” between what you owe on your car loan and its fair market value should your car be totaled. Insurance professionals can steer you right and find the discounts you’re eligible to deduct from the premium payments.

Renter’s Insurance

If you rent an apartment, you’ll find that the apartment management firm does not provide coverage for your possessions. However, many apartments require that you buy a renter’s insurance policy. Just be sure you don’t buy coverage from someone they recommend. Shop around and contact an insurance professional who can tailor the policy to your specific needs, and give you the best price by offering quotes from a host of different insurance carriers.

Your first thought about renter’s insurance is probably that it protects you against theft. And that’s true. But these policies usually offer a lot more. Each policy varies, but here’s a quick summary of some of the protections you get for your possessions against various hazards.

Some will even reimburse you for temporary living expenses if your apartment or rented home becomes unusable due to covered hazards. Just a nominal premium, usually payable monthly, avoids risking your hard-earned possessions – clothing, computers, game consoles, music and entertainment equipment. Buying renter’s insurance a wise step to take.

Health Insurance

With the cost of health care in the U.S. continuing to outstrip the inflationary costs for almost everything else in our economy, going without health insurance is a risky proposition. A single accident – playing sports, slipping in a wet or icy walkway – can quickly run into tens of thousands of dollars in hospital and doctor costs.

No matter where you look you’ll find plenty of news and debate on the issue of health care and health insurance. In today’s environment you have only three choices for obtaining health insurance.

1.       You can get it through your employer if the company offers it. Your employer will deduct a certain amount from your paycheck as your contribution to the premium cost.

2.       If you earn less than $15,281.70 per year (133 percent of the U.S. poverty level for a single person) [3] you may qualify for Medicaid programs administered by each state and funded by the Federal government. (This threshold is likely to change, but the latest income eligibility levels can be found at Medicaid.gov). [4] However, you may find programs more to your liking from traditional insurance carriers.

3.       Your third choice is to look for help from an insurance professional. The Affordable Care Act (ACA) and the many new regulations surrounding it require that every American have health insurance. Some states, and the Federal government, have set up “exchanges” or “market places” where you can buy insurance. Yet until the entire ACA program rolls out, there is simply too much confusion across the nation to try “going it alone.”

Need Some Help?

Quoteasy – We’re a team of insurance professionals who can make sure you have the best coverage for your personal situation. Car insurance, renter’s insurance and – yes – even health insurance. We’ll deliver the protection you want at the best rates and with every available discount. Call our friendly team at 305-587-2410. We’re here to help.

Source

(1) http://usgovinfo.about.com/od/moneymatters/a/edandearnings.htm (2) http://en.wikipedia.org/wiki/Vehicle_insurance_in_the_United_States#Requirements_by_state (3) http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Downloads/2013-Federal-Poverty-level-charts.pdf (4) http://www.medicaid.gov